Industry Minister James Moore announced today that most of Canada's long-anticipated anti-spam/malware legislation ("CASL" for short) will be coming into force on July 1, 2014. As part of today's announcement, Industry Canada also released a significantly revised and final version of its important CASL regulations.
CASL is widely considered to be the toughest commercial electronic messaging legislation in the world, and its coming into force will have significant implications for Canadian businesses, not-for-profit organizations and individuals using electronic means to communicate. Those who violate CASL could face fines of up to $1 million for individuals and $10 million for organizations. CASL also provides for a private right of action, which will not be available until July 1, 2017, with potential remedies that could amount to as much as $1 million per day for violations.
Most of the act, and the provisions concerning messaging will come into force on July 1, 2014. The provisions concerning the installation of computer programs will come into force on January 15, 2015, and the private right of action provided by CASL will come into force on July 1, 2017.
CASL in Summary
CASL creates an "opt-in" regime that requires senders of electronic messages (email, SMS, instant messaging etc.) to procure express or implied consent (in each case, solely as defined by CASL) from recipients prior to sending messages. It also prescribes form and content requirements that messages, including requests for consent, must adhere to. Two sets of regulations, one by the CRTC (finalized in March 2012), and the other by Industry Canada (mentioned above, and summarized below), inform the application of the legislation. The CRTC regulations set out the form and content requirements for messages and requests for consents and the Industry Canada regulations provide exemptions from the operation of the act.
CASL's basic prohibitions that should be top of mind for any organization or individual are the following:
- CASL prohibits the sending of commercial electronic messages unless the recipient has given express consent or the message falls into one of closed set of statutorily-defined categories where consent is implied. It also requires that messages and requests for consent to send messages adhere to prescribed form and content requirements including the provision of compliant unsubscribe functionality.
- CASL amends Competition Act to prohibit false or misleading representations in the sender description, subject matter field or message field of a message, or in the URL or other locater on a webpage. (NOTE: Senders will have to be particularly wary of making overly boastful statements in subject matter lines in an attempt to catch readers' attention.)
- CASL amends Canada's privacy law to prohibit the use of computer programs known as "address harvesters". These are programs that are designed to generate or search for email and other electronic addresses on the Internet to create mailing lists. The prohibition extends to both the use of address harvesting programs and to using electronic addresses that were obtained through the use of such programs.
- To combat spyware, malware and other malicious software, CASL prohibits the installation of computer programs without the consent of the computer's user or owner, subject to certain specific exemptions set out in CASL and the Industry Canada regulations. (NOTE: These provisions will come into force January 15, 2015).
Industry Canada Regulations –What's new?
The final Industry Canada Regulations retain much of what had been set out in the draft regulations published in January 2013, a summary of which can be found here, but also make some welcome drafting changes and include certain helpful additional exemptions. Despite these modest changes, there remain many fundamental issues with CASL that organizations need to be cognizant of (see below under "What the Regulations Do Not Do").
Exemptions:
Business to Business
The final regulations exempt messages sent within an organization by an employee, representative, consultant or franchisee to another employee, representative, consultant or franchisee of that organization and that concerns the activities of that organization.
The final regulations also exempt messages sent by an employee, representative, franchisee or contractor of an organization to another employee, representative, franchisee or contractor from another organization, to the extent that the organizations "have a relationship" at the time the message was sent and the message concerns the activities of the recipient organization.
Messages Sent in Response to a Request
The final regulations exempt messages sent in response to requests, inquiries or complaints, or otherwise solicited by the recipient. This exemption fixes an unintended problem in s.6(5) of the Act which would have made it illegal to send consumers messages in response to a request for information without obtaining additional consent.
Messages Sent to Enforce a Legal Right
The final regulations provide exemptions for messages sent due to a legal or juridical obligation (which may include, among other things, the sending of warranty or recall information, or the sending of electronic statements of account) or to enforce a legal right including a pending legal right. Examples include messages sent for debt collection, licensing, enforcing contractual obligations, enforcing court orders, and enforcement of foreign legal rights.
Messages Sent and Received on an Electronic Messaging Service
In response to stakeholder concerns, the final regulations now include the exemption of messages sent and received on an electronic messaging service so long as the form and content and unsubscribe requirements of the act are conspicuously published and readily available on the user interface through which the messages are accessed and the recipient consents to receive the messages expressly "or by implication."
Messages Sent to a Limited-Access Secure and Confidential Account
Another new exemption included in the final regulations in response to stakeholder concerns, exempts messages sent "to a limited-access secure and confidential account to which messages can only be sent by the person who provides the account." The application of this exemption will allow banks, for example, to continue sending messages to users of online banking services, through accounts established by the bank and accessible through such services.
Messages "Reasonably Believed" to be Accessed in a Foreign State
The final regulations revise the previous draft attempts at extra-territorial exemptions and now exempt messages that the sender reasonably believe will be accessed in a foreign state that is expressly listed in an annex to the regulations so long as that message conforms to the law of that state that addresses conduct similar to conduct prohibited under CASL.
Registered Charities and Political Parties, Organizations and Candidates
The final regulations exempt messages that are primarily fundraising solicitations by registered charities and by political parties, organizations and candidates. The exemptions apply only to registered charities under section 248(1) of the Income Tax Act and to political entities, leaving all other non-profits subject to the onerous requirements of CASL.
Third Party Referrals
The final regulations retain the exemption that applies to a single message sent as a result of a referral from someone with a family, personal, business or non-business relationship both with the sender and with the recipient. The sender must disclose the ordinary or full name of the referree with the underlying relationships in the single exempt message, and the implication here is that the single exempt message can be used to solicit consent of the recipient for subsequent messages.
Exemptions for Telecommunication Service Providers
The final regulations permit telecommunications service providers (TSPs) to allow the installation of computer programs without consent (i) in order to protect the security of all or part of its network from current and identifiable threats to availability, reliability, efficiency or optimal use of its network;(ii) for the purpose of updating or upgrading the TSPs network; and/or (iii) solely to correct a failure in the operation of a computer system or a program installed on it.
Clarifying the meaning of "personal or family relationship":
Messages (CEMs) sent by an individual to someone with whom the sender has a 'personal or family relationship' are exempt from the anti-spam provisions of CASL. The final regulations provide new definitions for what constitute personal and family relationships.
Personal Relationship: The final regulations have largely retained the definition of "personal relationship" first published in the January 2013 version of the draft regulations. Personal relationships cover in-person relationships, as well as virtual relationships between individuals who have had direct, voluntary two-way communications; and, in respect of which, it would be reasonable to conclude that the relationship is personal taking into consideration all relevant factors. These factors include the sharing of interests, experiences, opinions and information evidenced in the communications, the frequency of communication, the length of time since the parties communicated and if the parties have met in person. The recipient can however request to no longer receive such messages.
Family Relationship: The definition of 'family relationship' has been narrowed to consist of relationships between those who are married or in common-law partnerships or those who have any legal parent-child relationship.
Validity of Consent to Receive Messages from an Unknown Third Party:
The final regulations largely retain the onerous third-party consent and sharing of consent provisions from the January 2013 draft regulations that you can read further about in a previous blog post accessible here. These provisions place significant challenges on those who compile, sell and buy lists for marketing, or other purposes.
Defining Terminology in the Context of Non-Business Relationships:
CASL indicates that an "existing non-business relationship" includes membership, in a club, association or voluntary organization as defined by the Regulations. According to the draft regulations, a definition of "membership" is the status of having been accepted as a member in accordance with membership requirements.
For the purposes of CASL, the final regulations establish that a "club", "association" or "voluntary organisation" is a non-profit organization that operates exclusively for social welfare, civic improvement, pleasure or recreation, or for any other purpose than profit, so long as no part of the income of such organization was payable to, or otherwise available for the personal benefit of any proprietor, member or shareholder (except for an organization the primary purpose of which is the promotion of amateur athletics in Canada).
What the Regulations Do Not Do
The final regulations leave many stakeholder concerns unanswered and unaddressed. Some of the more pressing of these concerns include the following:
1) Consents under the Personal Information Protection and Electronic Documents Act (PIPEDA) are not automatically valid for the purposes of CASL (unless they were collected in a manner that also met CASL requirements) and such consents on record before CASL comes into force will not be 'grandfathered'. This means that, in some cases, even if some businesses are compliant with PIPEDA when seeking consent to collect or use the electronic addresses of individuals, these businesses may no longer be able to send messages to these individuals if they do not, in addition, comply with CASL.
2) The final regulations do not address the problems posed by CASL with respect to technology neutrality. CASL disporportionately affects the ability to send messages on media other than email. Significant concerns were expressed by many stakeholders during previous consultations in this regard, including that the application of form and content requirements to SMS messages and other social-media messages are impracticable.
Next Steps and Compliance
With yesterday's announcement, organizations and individuals only have six months within which to ensure that their processes and practices are compliant with the act. Depending on the scope of your electronic messaging activities, true compliance may require significant changes to your IT capabilities as well as to your communication and marketing practices. The changes can be expensive (well into the millions of dollars for some organizations) and will take time to implement.
The national team at McCarthy Tétrault LLP has produced a free and handy Anti-Spam Toolkit for use by organizations of any size to commence compliance activities.
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